Riddle for Construction Attorneys: Does Lien Clock Start When Materials Leave Supplier or Arrive At Jobsite?

It’s funny how you’ll go years not thinking of a particular issue, and then run into it two or three times in the same week.  That’s the case for the current riddle about mechanic lien law now confronting me.  And since I can’t find any answers in a survey of mechanic lien cases in the US, I turn to the world of construction attorneys to help.

So, it’s clear that mechanic liens must be filed within a prescribed time period in every state, and it’s clear that the time period starts at some defined marker. While not the case in all states, in many states the lien deadlines begin from when the lien claimant last furnished labor and/or materials to a project.

I’ve written about some nuances presented by this trigger date in the past, mostly related to whether punch list work or warranty work will count as a day of furnishing.  See, for example, “The Importance of Knowing When Your Lien Period Begins” and “Think You Know The Last Date You Delivered Materials or Performed Services?  Think Again.”

A few material suppliers have recently inquired with me as to whether their last date of “furnishing” is the date the materials arrive at the jobsite, or the date when the common carrier takes control of the materials if they are delivered to a loading dock FOB?  (Definition of FOB, by the way, available on Wikipedia at this link).

The concept, of course, is that if the materials are delivered to a common carrier FOB, the title will actually pass from the supplier to the prime contractor / subcontractor / owner at the moment it hits the FOB location.  So, does that mean the materials were “furnished?”

Or, are the materials not really “furnished” because they were merely put into the contractor or owner’s name and not yet furnished to the job site itself?  Liens are, after all, claims against the property and not against any specific individual in a theoretical sense…

I think this is a great question, but I honestly cannot find an answer :).  What says you?

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  • http://constructionlawva.com Christopher G. Hill

    Interesting question, I think it depends on how the contract is worded. My thought is that it is where the responsibility for the goods changes hands. The latest in my mind would be at the job site.

    On the other hand for mechanic’s liens in VA a supplier can’t lien for goods that aren’t incorporated into the real property (i. e. used in the construction) so it may have to be the job site.

    How’s that for a lawyer’s answer?

    • http://www.zlien.com Scott Wolfe Jr

      That’s exactly the confusing lawyer answer I was expecting :).

      Like Virginia, most states require the materials to get incorporated into the immovable before the lien attaches (before, there could be UCC rights). However, I don’t know if the incorporation = “furnishing.”

      For example, let’s say a material supplier furnishes doors, and they arrive on the job site on January 1st. The doors don’t get installed until August 1st. Was the last date of furnishing Jan 1 or Aug 1? I think the answer there is Jan 1.

      Which brings me back to this issue: What if the doors were shipped FOB on December 25th? Hmmm…

      I may have to chalk this one up to the general rule of: When filing a mechanics lien, error on the side of filing early, because you never know what kind of crazy rule nuance you may run into.

      • http://constructionlawva.com Christopher G. Hill

        Glad I could help. . .:) You example is a tough one. VA has case law that states that even with specifically constructed materials, until it’s incorporated, no lien. However, no case law (of course) that would answer your question. Logic would dictate that until you have lien rights, you shouldn’t be required to file a lien so the clock shouldn’t run. However, these are mechanic’s liens so logic may or may not enter the picture. . .

  • http://www.levycraig.com Rob Pitkin

    In Missouri and Kansas where I primarily practice, the time for filing a mechanic’s lien generally runs from the day the materials were last actually INSTALLED. However, the best practice would be to docket a more “conservative” date, such as when they were DELIVERED to the project site.

    Scott, your example is more troublesome. If materials were SHIPPED on Dec. 25, DELIVERED to the job site on Jan. 1, but not INSTALLED until Aug. 1, I don’t see how (at least in Missouri and Kansas) the supplier would have mechanic’s lien rights until Aug. 1.

    I actually have a case pending right now where materials were shipped and delivered to the job site, but never installed because the project shut down. The question for the Court is whether a supplier in Missouri has mechanic’s lien rights for materials that were never installed. The complicating aspect of the case is that the materials were “custom” for this particular project (which is being torn down!) and cannot be used on another project. So, if there is no mechanic’s lien rights, the supplier will be SOL!

  • http://www.zlien.com Scott Wolfe Jr

    Thanks for the comment, Rob. Interesting. I realized that lien rights didn’t arise in most states for suppliers until the materials were incorporated into the structure, but didn’t really realize that this meant they weren’t “furnished” until incorporation. It’s one of those subtle points that got lost on me.

    With that said, I have experienced the problems that arise with specially fabricated materials, and understand your client’s issue. Some states have special rules for specially fabricated materials, allowing exactly for your clients situation (they can file lien even when specially fabricated materials are never used). I don’t know the situation in MO, though, it sounds like they don’t have any special provisioning for this.

    When states do allow specially fabricated material liens to persist even without installation, they usually also require some special preliminary notice.

    So — I love asking questions to lawyers. It always creates more questions than answers :).

  • http://nymechanicsliens.blogspot.com Vincent Pallaci

    Sorry to say it, but it depends in New York.There are two different types of materials under New York’s Lien Law.

    The first is the regular old every day materials that are not specially manufactured for a specific job. These materials are not lienable until they are delivered to the job site and actually incorporated into the project.

    The other kind of materials are specially fabricated materials (such as specifically designed precast concrete). These materials are lienable the second that they are fully manufactured for the project. They are lienable regardless of whether they are ever actually incorporated into the project and the time when the lien starts to run can vary from the date of manufacture to the date of installation depending on the specific circumstances. (Note there is not a preliminary notice for specially manufactured materials in New York).

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